"The Sunday Political Brunch" -- June 10, 2012

By Mark Curtis - Posted on June 10th, 2012

(Providence, Rhode Island) – Happy Birthday! This weekly “Brunch” political column is one-year old today! Each week, hundreds (sometimes thousands) of people have read what is essentially a one-page tip-sheet on the week in politics. Why did I start it? Well, most of the people I speak to about politics aren’t political junkies as I am and don’t follow the daily ins and outs of the business. All I want to do is provide some brief headlines to bite into - some nuggets of information to chew on and a bit of analysis to digest. In many ways, I want it to be like the "Kiplinger Letter," for those of you who follow business trends. So, enjoy some birthday cake, and on with this week’s column:

“Quote of the Week” – At a Friday news conference regarding the economy, President Obama said, "The private sector is doing fine." As the quote zoomed across the Internet at lightning speed, even some top Democrats recoiled at the implications of the statement. The need for damage control was so rapid that the President had to amend the statement (even to retract it, in the opinion of many) later in the day. It’s been all over the news ever since.

“Déjà vu?” – The President’s line had a certain familiar ring. Haven’t we heard something like this before? Yes! In 2008, Republican nominee John McCain was roundly criticized when he said, “The fundamentals of our economy are strong,” during the Lehman Brothers meltdown, which was one of the worst economic crises in U.S. history.

“But, Will Anyone Remember?” – Well, don’t be surprised if you see Friday’s Obama clip over and over in Republican TV ads, as we head into the fall. The McCain quote was played a lot, too, four years ago. Does it matter? Maybe. Keep in mind that the McCain-Palin ticket was ahead by six points the day before the Lehman Brothers collapse (and McCain’s quote.) The lead changed dramatically the day after, and Senator Obama won going away. Of course, the quote didn’t cause McCain to lose the election; but the economic realities did. With the unemployment rate likely to stay near or above eight percent, the 2012 election could be decided by simple economic realities many people face.

“Wisconsin Aftermath” – There was a lot of speculation after Tuesday night’s recall victory for Wisconsin Republican Governor Scott Walker. Many people wonder what the long-term impact will be in other states, and in the overall public employee union movement. In my analysis, the impact will be very little. The reason that Governor Walker was able to strip collective bargaining rights was that he had strong majorities in both chambers of the Wisconsin Legislature. Most states have a more divided, or shared, governing structure, i.e. Republicans may hold the Governor’s mansion, but Democrats may control one, or both, houses of the legislature.

“Déjà vu, Part 2?” – Yes, we’ve seen the above scenario before, too. Remember in early 2010, when President Obama was able to sign health care reform legislation into law? He had strong majorities in both the House and Senate, and simply had enough votes to get it passed. As I always say, politics is as much about math as it is about ideology. If you have enough votes to pass something – however drastic it may seem –you call for the vote. The downside to victory is a potential backlash if the public thinks you went too far. For President Obama, that meant a resounding Democratic loss in the midterm Congressional elections; and for Governor Walker it meant Republicans losing their majority in the Wisconsin Senate the very same night he beat back his recall.

“The Lasting Issue” – No matter what side of the Wisconsin argument you were on, there is one lingering issue that nearly every state and every municipality in the nation must still face: unfunded public pension liabilities. The single biggest issue causing huge budget deficits is the amount of money that was promised to public employees when they retired. In one Rhode Island community – now teetering on bankruptcy – 40 percent of its current budget goes to retiree pensions and benefits. The difference between Wisconsin - when compared to Rhode Island and most most other states - is that Wisconsin's public unions were not brought to the bargaining table to negotiate voluntary concessions, as they were in many other states. Few states are likely to follow the Wisconsin model, simply due to the dynamics of a more balanced power structure in government.

My alma mater, Purdue University, recently announced that Indiana Republican Governor Mitch Daniels will be the new President of Purdue when his term as governor expires in 2013. Great choice! Having the courage and intelligence to call for the elimination of public sector unions, as they are bankrupting our country, is refreshing. I have always been proud of my fellow Purdue alumni,such as Neil Armstrong, John Wooden, Drew Brees, and Brian Cardinal, and am excited to have Governor Daniels take over as President of our University. Boiler Up!

Just this morning on Fox News Sunday, Indiana Gov. Mitch Daniels called for the elimination of public sector unions. When Wallace asked whether Daniels would like to see public-sector unions disappear entirely, Daniels replied: "I think government works better without them, I really do." Interpretation: If I don't have to worry about whether I am providing sustainable wages, health care benefits and the like, my job of balancing a state budget is much easier. Daniels, as you may recall, in 2005 signed an executive order that eliminated collective bargaining rights for government workers. The end result is that Indiana state workers receive lower salaries and must pay higher health care costs. The trend is set. When will people realize that there is a direct correlation between the stagnation of labors wages and the decline of unions?